EU-Japan

The European Union-Japan Free Trade Agreement negotiations were officially launched on 25 March 2013.

Japan originally had the stronger interest in discussing a trade agreement with the European Union (EU). Tokyo wanted the same advantages as Korea had since signing a trade deal with the EU. But after the Shinzo Abe government joined the Trans-Pacific Partnership (TPP) in summer 2013, the Pacific pact became a priority for Japan.

The tide turned again with Trump’s election as US President. One of his first executive orders was to withdraw the US from the TPP. The EU-Japan FTA then regained momentum, the two sides having claimed their intention to conclude the negotiations by 2017.

For a long time, little was known of the treaty, apart from the EU summaries of negotiations and a few leaks. The negotiating mandate is still not public, but a leaked version in German is now available.

In June 2017, major leaks revealed the deal failed to uphold environmental standards regarding, for instance, illegal timber and whaling, and included the investor-state dispute settlement (ISDS) mechanism.

The ISDS mechanism is a point of discord between the two parties. The EU champions its new investor court system whereas Japan favours the more traditional system. It could possibly take a hybrid form between the two. The mechanism gives investors a special right to challenge new laws or regulations if they deem that their expected profits or investment potential could be negatively affected.

Another part of the treaty would be a regulatory cooperation scheme that encourages alignment and mutual recognition of standards. This effectively provides big business with special access to policy making process. Corporate lobbies from both sides have encouraged the inclusion of such a system to eliminate so-called “barriers to trade”, another term for higher standards, often leading to lower protections for people and the environment.

Tariff reduction and elimination have been among the main stumbling blocks. The EU is asking Japan to slash tariffs on farm products such as cheese and pork above the levels agreed to in the TPP, while Japan seeks the removal of tariffs on automobiles and electronic equipment. The EU also wants Japan to extend copyright protection for some sound recordings to 70 years. Tokyo also wishes to include provisions ensuring the free flow of data and the prohibition of data localisation requirements. The EU agreed to study the issue, although the European Parliament approved stronger data protection regulations in April 2016.

On 6 July 2017, the EU and Japan reached a political agreement on the free trade deal but further discussion on areas such as investment protection (ISDS) and data flows are expected before the final conclusion.

Ahead of a possible bilateral EU-Japan summit to conclude negotiations on a free trade agreement, the European Automobile Manufacturers’ Association (ACEA) calls on negotiators to ensure a balanced outcome for the European automobile sector.

The European Union and Japan expect to commit to signing a free trade deal on the eve of a G20 summit in what both see as a push back against a feared U.S. turn toward protectionism under President Donald Trump.

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